Gold prices retreated on Friday and were on track for their biggest weekly fall in over five months, as markets digested Donald Trump's victory and its potential impact on the U.S. interest rate trajectory.

Spot gold fell 0.7% to $2,688.30 per ounce as of 0917 GMT and was down 1.7% for the week. U.S. gold futures shed 0.4% to $2,696.30.

"The gold market still needs to find its balance after the surprisingly clear outcome of the U.S. presidential elections. It seems to be showing a 'buy the rumor, sell the fact' reaction to what appears to be a Republican sweep," said Carsten Menke, an analyst at Julius Baer.

"We believe the election dust needs to settle before we can see more clearly how another potential Trump presidency is shaping up for the gold market. This calls for a continued consolidation or even correction in the short term."

The Federal Reserve on Thursday cut interest rates by 25 basis points as widely expected, but indicated a cautious approach to further cuts.

Fed Chair Jerome Powell said the results of Tuesday's presidential election would have no "near-term" impact on U.S. monetary policy. Traders see a 75% chance of another 25-bps cut in December.

Trump's tariff policy is viewed as inflationary, potentially leading to slower rate cuts. The uncertainty surrounding the rate-cut trajectory is causing a pullback in gold, said Soni Kumari, a commodity strategist at ANZ.

Bullion is considered a hedge against inflation but higher interest rates reduce non-yielding bullion's appeal.

On physical front, gold demand in India faltered this week as price volatility prompted buyers to delay purchases after strong festival sales, while Japan and Singapore saw some buying.

Spot silver fell 1.4% to $31.54 per ounce, platinum fell 0.9% to $988.30 and palladium shed 1.1% to $1,013.75. All three metals were heading for a weekly decline.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Vijay Kishore)